Increased insurer competition is reducing many healthcare liability premiums, but underwriters remain cautious in higher-risk areas, according to a Marsh mid-year update.

“Insurers have been monitoring high-risk sectors such as obstetrics, youth/disability care, IVF, virtual and single-condition care, and have been cautious in their underwriting approach, resulting in more restrictive cover and less available capacity in the market,” the report says.

Outside those sectors, the healthcare industry has generally attracted increased insurer competition, with lower premiums and broader coverage at renewals.

A $56 million settlement in the IVF sector last August was one of the largest medical negligence class action payouts in Australia and has kept that area and the need for transparency and regulation under the spotlight.

Australian medical malpractice premium changes ranged from 10% reductions to 10% increases in the first half, with shifts varying across four main risk categories.

Aged care providers have benefited from increased capacity from London and local insurers, while hospitals and general medical also had reductions of up to 10%.

National Disability Insurance Scheme provider rates have not been as competitive. Risks with an adverse claims history, youth exposure and high abuse exposure have had increases of more than 10%, while lower-risk insureds have had 5% reductions.

For allied health and community care providers, changes have ranged from 5% reductions to 10% increases, with pricing and availability challenges particularly in abuse cover.

The industry-specific report was released with the Marsh Australian Mid-Year Insurance Market Update, which mostly anticipates improved conditions for insureds across lines including property, liability and professional indemnity.

In healthcare, a decline in the profitability of US medical malpractice insurance has pushed international insurers to deploy capacity in less volatile jurisdictions, and Australia has had new underwriting agencies and established local insurers competing for business.

Medical malpractice claims are increasing in severity, driven by healthcare inflation. The sector has also had an uptick in regulatory intervention, and it accounted for the highest number of data breach notifications reported as of June last year.

“While cyber insurance market conditions have generally improved, including for the healthcare sector, insurers still remain cautious around the industry’s claims exposure,” the market update says.

Marsh says insureds in preferred subsectors such as non-maternity and day hospitals, general practice groups and aged care providers, and those with minimal claims activity, are likely to continue benefiting from premium savings and increasing coverage.

The report is available here.